Posts from the ‘SaaS Forecasts’ Category

Global SaaS software revenues are forecasted to reach $106B in 2016, increasing 21% over projected 2015 spending levels. A Goldman Sachs study published earlier this year projects that spending on cloud computing infrastructure and platforms will grow at a 30% CAGR from 2013 through 2018 compared with 5% growth for the overall enterprise IT.

Centaur Partners and other firms mentioned in this roundup are seeing more enterprise-size deals for cloud computing infrastructure and applications. While each of these consultancies and research firms have varying forecasts for the next few years, all agree that cloud computing adoption is accelerating in enterprises on a global scale.

Key take-aways from the roundup are provided below:

By 2018, 59% of the total cloud workloads will be Software-as-a-Service (SaaS) workloads, up from 41% in 2013. Cisco is predicting that by 2018, 28% of the total cloud workloads will be Infrastructure-as-a-Service (IaaS) workloads down from 44% in 2013. 13% of the total cloud workloads will be Platform-as-a-Service (PaaS) workloads in 2018, down from 15% in 2013. The following graphic provides a comparative analysis of IaaS, PaaS and SaaS forecasts from 2013 to 2018. Source: Cisco Global Cloud Index: Forecast and Methodology, 2013–2018. (PDF, free, no opt-in).

Centaur Partners’ analysis of SaaS & cloud-based business application services revenue forecasts the market growing from $13.5B in 2011 to $32.8B in 2016, attaining a 19.5% CAGR. Centaur provides a useful overview of current market conditions including M&A activity in their latest market overview published this month, Introduction to Centaur Partners: SaaS Market Overview, (PDF, free, no opt-in).

Global SaaS software revenues are forecasted to reach $106B in 2016, increasing 21% over projected 2015 spending levels. Spending on integration, storage management, and database management systems are projected to experience the greatest growth in 2015. These and other key insights are from Forrester’s SaaS software subscription revenue by category show below. Source: Enterprise software spend to reach $620 billion in 2015: Forrester.

$78.43B in SaaS revenue will be generated in 2015, increasing to $132.57 in 2020, attaining a compound annual growth rate (CAGR) of 9.14%. The following graphic and table provides an overview of Forrester’s Global Public Cloud Computing market size analysis and forecast for the years 2011 to 2020. Source: Institut Sage.

IDC predicts that by 2016, there will be an 11% shift of IT budget away from traditional in-house IT delivery, toward various versions of cloud computing as a new delivery model. By 2017, 35% of new applications will use cloud-enabled, continuous delivery and enabled by faster DevOps life cycles to streamline rollout of new features and business innovation. Source: 2015-2017 Forecast: Cloud Computing to Skyrocket, Rule IT Delivery.

By 2018, IDC forecasts that public cloud spending will more than double to $127.5 billion. This forecast is broken down as follows: $82.7 billion in SaaS spending, $24.6 billion for IaaS and $20.3 billion in PaaS expenditures. Source: Forecasts Call For Cloud Burst Through 2018.

By 2016 over 80% of enterprises globally will using IaaS, with investments in private cloud computing showing the greater growth. Ovum forecasts that by 2016, 75% of EMEA-based enterprises will be using IaaS. These and other insights are from the presentation, The Role of Cloud in IT Modernisation: The DevOps Challenge (free PDF, no opt in). The graphic below provides an analysis of cloud computing adoption in EMEA and globally.

By 2018, more than 60% of enterprises will have at least half of their infrastructure on cloud-based platforms. These and other are insights are from the keynote Cloud Business Summit presentation Digital Business, Rethinking Fundamentals by Bill McNee, Founder and CEO, Saugatuck Technology. Source: Digital Business, Rethinking Fundamentals.

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Microsoft’s latest study shows enterprises’ pace of cloud computing adoption continues to accelerate. Nearly half of the respondents (45%) report they have cloud-based applications running in production environments. 58% report that they selectively target new applications and projects for cloud computing.

Microsoft commissioned 451 Research to complete one of the most comprehensive global surveys to date of hosting and cloud computing, titled Hosting and Cloud Go Mainstream releasing the results earlier this month. The 74 page slide deck of results provides a wealth of insights into the current and future state of hosting and cloud computing. 451 Research constructed the methodology to include interviews with 2,000 companies and organizations of all sizes from 11 countries, with more than a third of respondents coming from the United States. Microsoft and 451 Research provided the slides showing the result of screener questions, which provides a useful context for analyzing the survey results.

Here are the key take-aways from the study:

45% of enterprises globally are running production-level cloud computing applications today. North America and Asia have the greatest percentage of enterprises reporting broad implementation of production cloud-based applications (17% each). North America has the greatest percentage of enterprises in the discovery and evaluation phase of cloud computing adoption at 29%.

58% of global enterprises are selectively target new applications for cloud computing, with 18% heavily relying on cloud computing for new projects. The following graphic shows the distribution of organizations’’ approaches to using cloud computing for new applications or IT projects.

SaaS (71%) and Hosted Infrastructure Services (69%) are the two most common IT services currently purchased today, with 14% growth forecasted in each by 2016. The fastest growing category is Platform-as-a-Service (PaaS), with 37% purchasing these services today projected to grow another 26% in two years.

SaaS is most prevalent in enterprises with over 500 employees, and Hosted Infrastructure Services, in government and education. Please see the graphic below for the distribution of responses by IT service and organization type.

Spending on hosted private clouds will increase from 28% of spending today to 32% in 2016, with traditional dedicated infrastructure services dropping from 48% to 42%.

The majority of SaaS users are employees (45%) followed by businesses (which could be interpreted as suppliers and the broader supply chain) (22%), consumers (18%) and business partners (including distribution channels (14%).

Telephone conversations with customer support specialists is the most valuable form of communication (just over 60%) across all support channels. It is also the most preferred channel for SaaS support.

Business applications (17%), databases (14%) and e-mail 12%) are the top three application spending categories today in hosted and cloud applications. The following graphic breaks out spending by hosting and cloud configuration.

Having a well-defined architecture for security (7.7 out of 8.0), understanding who the end-users are (7.6) and train users to be cautious with access & security (7.5) in addition to having a well-defined architecture for performance (7.5) are the three top best practices for cloud computing projects.

44% of enterprises globally have “shadow IT”, meaning business units are spending their own budget on cloud computing projects outside of the IT approval processes. The following graphic provides the breakdown by type of organization included in the survey.

87% of respondents globally would recommend cloud computing to a peer or colleague and 13% would not. When asked why or why not, respondents most often mentioned a good experience and better service/it works (approximately 17%), followed by improving costs/cost effective/cheaper (approximately 16%). Security issues and concerns (25%) and uncertainty/it’s too new (approximately 16%) are the reasons for not recommending cloud computing.

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Time-to-market, more flexible support for business strategies by IT, and faster response time to competitive conditions are combining to accelerate cloud computing adoption today.

Of the enterprises I’ve spoken with over the last several months including several Fortune 500 corporations to small businesses just beginning to evaluate cloud-based CRM and manufacturing systems, one message resonates from all of them: they need enterprise applications that keep pace with how fast they want to move on new business strategies. The latest round of cloud computing forecasts reflect the urgency enterprises have of making IT a foundation for strategic business growth.

The following is a summary of the latest cloud computing forecasts and market estimates:

IDC predicts public IT cloud services will reach $47.4B in 2013 and is expected to be more than $107B in 2017. Over the 2013–2017 forecast period, public IT cloud services will have a compound annual growth rate (CAGR) of 23.5%, five times that of the IT industry as a whole. The growing focus on cloud services as a business innovation platform will help to drive spending on public IT cloud services to new levels throughout the forecast period. By 2017, IDC expects public IT cloud services will drive 17% of IT product spending and nearly half of all growth across five technology categories: applications, system infrastructure software, platform as a service (PaaS), servers, and basic storage. Software as a service (SaaS) will remain the largest public IT cloud services category throughout the forecast, capturing 59.7% of revenues in 2017. The fastest growing categories will be PaaS and Infrastructure as a service (IaaS), with CAGRs of 29.7% and 27.2%, respectively. Source: IDC Forecasts Worldwide Public IT Cloud Services Spending to Reach Nearly $108 Billion by 2017 as Focus Shifts from Savings to Innovation.

Informatica’s presentation titled Enable Rapid Innovation with Informatica and MicroStrategy for Hybrid IT by Darren Cunningham, Informatica Cloud and Roger Nolan, Informatica Data Integration and Data Quality contains a useful series of cloud market overviews supported by 451 Research Gartner, Forrester and IDC data. A summary of the statistics section is shown below:

Gartner predicts that in the next five years enterprises will spend $921B on public cloud services, attaining a CAGR of 17% in the forecast period. Darryl Carlton, Research Director, APAC with Gartner recently presented Cloud Computing 2014: Cloud Computing 2014: ready for real business? His presentation is full of insightful analysis and market forecasts from Gartner, with specific focus on Asia-Pacific.

Visiongain predicts the Platform-as-a-Service (PaaS) submarket is valued at $1.9B in 2013 growing to $3.7B in 2018, attaining a 14.3% CAGR for the period 2013-2018. The following figure shows the firm’s forecast. Source: Visiongain on Slideshare.

Gartner predicts that in the next five years enterprises will spend $921B on public cloud services, attaining a CAGR of 17% in the forecast period. Darryl Carlton, Research Director, APAC with Gartner recently presented Cloud Computing 2014: Cloud Computing 2014: ready for real business? His presentation is full of insightful analysis and market forecasts from Gartner, with specific focus on Asia-Pacific.

Visiongain predicts the Platform-as-a-Service (PaaS) submarket is valued at $1.9B in 2013 growing to $3.7B in 2018, attaining a 14.3% CAGR for the period 2013-2018. The following figure shows the firm’s forecast. Source: Visiongain on Slideshare.

Boston Consulting Group writes that SaaS is a $15B market, growing at three times that rate of traditional software. BCG estimates that SaaS is 12% of global spending on IT applications. BCG interviewed 80 CIOs and found they were willing to consider SaaS solutions for 35% to 60% of their application spending. BCG also evaluated how the economics of cloud software adoption vary for on-premises versus SaaS customers. The following two charts from the completed study. Source: (Free, opt-in required) Profiting from the Cloud: How to Master Software as a Service

Key takeaways of the study results released during the webinar include the following:

Customer Analytics (72%), followed by supply chain, business optimization, marketing optimization (57%), risk and fraud (52%), and marketing (58%) are the areas in which respondents reported the strongest interest.

When the customer analytics responses were analyzed in greater depth they showed most interest in customer satisfaction (50%) followed by customer profitability (34%), customer retention/churn (32%), customer management (30%), and cross-sell/up-sell (26%).

Adoption was increasingly widespread and growing, with over 90% of respondents reporting that they expected to deploy one or more type of predictive analytics in the cloud solution.

Industries with the most impact from predictive analytics include retail (13% more than average), Financial Services (12%) and hardware/software (4%). Lagging industries include health care delivery (-9%), insurance -11%) and (surprisingly) telecommunications (-33%). The following graphic illustrates the relative impact of cloud-based predictive analytics applications by industry.

Adoption of Cloud-based Predictive Analytics by Industry

The most widespread analytics scenarios include prepackaged solutions (52%), cloud-based analytics modeling (47%) and cloud-based analytic embedding of applications (46%). Comparing the 2011 and 2013 surveys showed significant gains in all three categories, with the greatest being in the area of cloud-based analytic modeling. This category increased from 51% in 2011 to 75% in 2013, making it the most likely analytics application respondents are going to implement this year.

63% of respondents report that when predictive analytics are tightly integrated into operations using Decision Management, enterprises have the intelligence they need to transform their businesses.

Impact of Predictive Analytics Integration Across The Enterprise

Data security and privacy (61%) followed by regulatory compliance (50%) are the two most significant concerns respondent companies have regarding predictive analytics adoption in their companies. Compliance has increased as a concern significantly since 2011, probably as more financial services firms are adopting cloud computing for mainstream business strategies.

Concerns of Enterprises Who Are Using Cloud-based Predictive Analytics Today

Internal cloud deployments (41%) are the most common approach to implementing central cloud platforms, followed by managed vendor clouds (23% and hybrid clouds (23%). Private and managed clouds continue to grow as preferred platforms for cloud-based analytics, as respondents seek greater security and stability of their applications. The continued adoption of private and managed clouds are a direct result of respondents’ concerns regarding data security, stability, reliability and redundancy.

Approach To Cloud Deployment

The study concludes that structured data is the most prevalent type of data, followed by third party data and unstructured data.

While there was no widespread impact on results from Big Data, predictive analytics cloud deployments that have a Big Data component are more likely to contribute to a transformative impact on their organizations’ performance. Similarly those with more experience deploying predictive analytics in the cloud were more likely to use Big Data.

In those predictive analytics cloud deployments already operating or having an impact, social media data from the cloud, voice or other audio data, and image or video data were all much more broadly used as the following graphic illustrates.

Which Data Types Deliver The Most Positive Impact In A Big Data Context

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I recently had the opportunity to speak with Jennifer Bewley and Rachel Ceccarelli of Dice.com regarding the trends they are seeing in cloud computing recruiters’ searched-for terms on their sites. They’re seeing exponential growth in cloud computing-related job listings today and provided an analysis of the top ten cloud computing skills recruiters are searching for.

From just 13 cloud computing-related jobs listed in May, 2008, their site has over 5,000 today. The following graphic shows the growth in cloud computing job listings on their site over time.

The following are the top ten cloud computing skills searched for on Dice.com as of today:

They also demonstrated Open Web, a unique new web application in beta right now that has the ability to aggregate all social networks, keywords, and published experience of technical professionals. The accuracy and speed of Open Web is impressive; it’s been in beta since January and responds like a production-ready app. Jennifer and Rachel mentioned that recruiters using Open Web today are seeing 30% response rates to their queries to in-demand technical professionals.

What’s unique about Open Web is that it provides a 360-degree view of potential candidates, including all social media they participate in, in addition to discussion boards and favorited or liked sites on Facebook. The following is what Open Web looks like today:

Bottom line: Recruiting analytics and tools online are accelerating quickly, making it possible for companies searching for cloud computing talent to find it quicker than ever before. For those searching for a job in the field, making every aspect of your online presence reflect cloud computing expertise can make you stand out in recruiter’s searches.

Note: Dice.com isn’t now and has never been a client. I chose to write this post to serve readers who frequently ask me to research hiring trends in cloud computing.

The worldwide cloud computing market will grow at a 36% compound annual growth rate (CAGR) through 2016, reaching a market size of $19.5B by 2016.

38% of enterprises surveyed break out cloud computing budgets, while 60% include cloud-related spending as part of their enterprise-wide IT budgets. TheInfoPro asserts that cloud computing’s benefits of greater business orchestration and reduced time-to-market have led to a change in budgeting approaches.

The median enterprise cloud computing budget is $675,000 and the mean enterprise cloud computing budget is $8,234,438. The study found the largest enterprise cloud computing budget at $125M. The following graphic provides a distribution of cloud computing budgets by range.

Internal Private Cloud (35%), Cloud Provider Assessments/Strategy Planning (33%), Infrastructure-as-a-Service (IaaS) (31%) and Software-as-a-Service (30%) are the top four cloud computing-related projects enterprises are working on right now. Cloud Provider Assessments/Strategy Planning have seen the largest increase, attributable to more enterprises looking to better support strategic plans with more agile, efficient IT organizations.

83% of enterprises face significant roadblocks that hold them back from moving beyond cost reduction to faster time-to-market and better orchestration of their businesses. Respondents mentioned that politics, budget, time and staff are the main sources of roadblocks to getting more value out of their cloud computing investments. The majority of these roadblocks are not related to IT. They include lack of clarity regarding organization and budget (37%), resistance to change (16%) and lack of trust (visibility and reliability) (15%). The following graphic illustrates the enterprise cloud journey as defined in TheInfoPro Wave 5 Cloud Computing Study.

Consistent with many other enterprise cloud computing surveys, security is the biggest pain point and roadblock to cloud computing adoption (30%). Migration and integration of legacy and on-premise systems with cloud applications (18%) is second, and lack of internal process (18%) is third. The following graphic shows a rank ordering of cloud computing-related pain points.

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One of the most common questions I get from students is where they can find free cloud computing and enterprise software research.

Few if any of my students work for companies who have subscriptions with the top analyst firms however. A small group of students are working on a start-up on the side and want to absorb as much market data as they can.

Many of my former students are also in IT management roles, and when they become interested in a specific cloud computing or enterprise topic over time, they write me and ask if I have any data on their subject of interest. I keep the following list updated from them too. To serve all these students I’ve been adding to the list shown below for a number of years. None of these companies are current or past clients and I hold no equity positions in any of them.

The requests are so prevalent in global competitive strategy courses I distribute this list at the beginning of the semester with the following disclaimers.

Many of the cloud computing and enterprise software companies pay to have white papers written and research done. Writing white papers and doing research for an enterprise software vendor client is a very lucrative business for many industry analyst firms. Ethical industry analysts will often insist that a disclaimer be included in the white paper and on the website stating that they and their firms were hired to write the paper or do the research and publish the report.

The reports are intellectual property of the firms publishing them. Enterprise software vendors often pay tens of thousands of dollars at a minimum for reprint rights and the right to provide them on their websites. I advise my students to seek out the copyright and quote policies of the research firm of interest if they plan on re-using the graphics in any published materials or in their blog posts. One for example, the Gartner Copyright and Quote Policy is shown here.

Pay attention to the methodologies used in each report and realize they change over time. This is especially the case with the Gartner Magic Quadrant and MarketScopes. Gartner has been very active this year in refining the Magic Quadrant methodology for example.

The following are the list of cloud computing and enterprise software vendor sites that offer free downloads of cloud computing and enterprise software research:

BMC Software – Many free reports from Gartner, Forrester, The 451 Group and other research firms covering advanced performance analytics (APA), cloud computing, IT Service Management and long-term technology trends. Link: http://www.bmc.com/industry-analysts/reports/

Computer Associates – An extensive collection of cloud computing and enterprise software research organized into the following categories: cloud; data management; energy and sustainability management; IT automation; IT security; IT service management; mainframe; project and portfolio management; service assurance and virtual organizations. CA requires opt-in on the latest research as they use this site as part of their lead generation strategy. Link: http://www.ca.com/us/collateral/industry-analyst-reports.aspx

Microsoft – Balancing the need to support their enterprise applications today and create demand for cloud-based initiatives now and in the future, Microsoft’s series of analyst reports reflect their evolving business model. Microsoft has licensed the latest research from Enterprise Strategy Group (ESDG), Forrester, Gartner, IDC, Ovum, Yankee Group and others listed on this site. Link: https://www.microsoft.com/en-us/news/itanalyst/

Oracle - The most comprehensive collection of industry analyst research online for any enterprise software vendor, Oracle has hundreds of research reports available for viewing under their reprint licenses for free, and also for download. The reports are organized into corporate, infrastructure, systems, services, solutions, industries, enterprise applications and regions. Link: http://www.oracle.com/us/corporate/analystreports/index.html

SAS – The most extensive and well-organized online collection of analyst research on analytics and business intelligence (BI) available, SAS makes research available from fifteen analyst firms across six industries on this area of their website. You can find the SAS Analyst Viewpoints section of their website here: http://www.sas.com/news/analysts/

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The majority of cloud computing revenue in 2012 was generated from vendors with sales over $75M (66%) and who are privately held (77%), with Platform-as-a-Service (PaaS) projected to attain a 41% compound annual growth rate (CAGR) through 2016.

Market Monitor, a service of 451 Research, is also predicting 36% CAGR in cloud computing, growing from $5.7B in 2012 to $20B by the end of 2016 in their Cloud-as-a-Service overview report. Other research firms including Gartner have much higher forecasts for cloud computing in general and IaaS, PaaS and SaaS specifically.

Market Monitor relies on a bottoms-up forecasting methodology that includes revenue analysis and forecasts from 309 cloud-services providers and technology vendors across 14 sectors. Their taxonomy defining Cloud as a Service is shown in the following graphic:

Here are the key take-aways from the report:

The cloud computing market will grow from $5.7B in 2012 to $20B in 2016, attaining a 36% CAGR over the forecast period. The following graphic from the report shows the breakout of revenue on a yearly basis throughout the forecast period.

Platform-as-a-Service (PaaS) will attain a 41% CAGR through 2016, generating 24% of total cloud revenues. 71% of PaaS revenues will be generated by vendors over $75M in sales according to the study.

Infrastructure-as-a-Service (IaaS) will attain a 37% CAGR through 2016, generating 51% of cloud revenue. 69% of IaaS revenues will be generated by vendors over $75M in sales according to the study.

SaaS will attain a 29% CAGR through 2016 and the distribution of revenue by vendor size shows how fragmented this area of the market is. The following is a summary table from the report showing distribution of sales by vendor and category.

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The best manufacturers I’ve visited this year all share a common attribute: they are obsessed with making themselves as easy as possible to work with from a supply chain, distribution and services standpoint. Many are evaluating cloud-based manufacturing applications including Enterprise Resource Planning (ERP) and several have adopted cloud-based applications across their companies.

With so much interest, there is much confusion as well. I recently spoke with Cindy Jutras, founder and CEO of MintJutras. Her firm has recently completed a survey of SaaS adoption in manufacturing, distribution and other industries. She found the following:

49% of respondents in the manufacturing & distribution industries do not understand the difference between single- and multi-tenant SaaS architectures. Overall 66% of respondents to the survey did not know.

SaaS-based applications are 22% of all manufacturing and distribution software installed today, and will grow to 45% within ten years according to MintJutras.

The three most important characteristics of a SaaS solution in manufacturing and distribution include giving customers a measure of control over upgrades, consistent support for global operations and allowing for rapid and frequent upgrades.

Why Manufacturers Are Looking To Cloud Computing

Manufacturers are under constant pressure to increase accuracy, make process speed a competitive force, and capitalize on their internal intelligence and knowledge to make every supplier, distributor and service interaction count. The manufacturers spoken and visited with to gain the following insights are in the high tech, industrial and aerospace and defense industries, where rapid product lifecycles and short time-to-market schedules are commonplace.

Cloud-based strategies give these companies the chance to bring their own innate intelligence and knowledge into every sales situation. While on-premise systems could also do this, cloud-based systems were quicker to roll out, easier to customize and showed potential to increase adoption rates across resellers.

One manufacturing manager explained how during a new product launch the speed and volume of collaboration was so rapid on between suppliers and distributors that an allocation situation was averted. That he said, made senior management believers. These epiphanies are happening daily in manufacturing.

Based on my visits with manufacturers, here are the ten ways they are using cloud computing to revolutionize manufacturing:

Capturing and applying company-wide intelligence and knowledge through the use of analytics, business intelligence (BI), and rules engines. For the many manufacturers who rely on build-to-order, configure-to-order and engineer-to-order strategies as a core part of their business models, using cloud-based platforms to capture knowledge and manage rules is accelerating. A key part of this area is mobility support for analytics, BI and rules engine reporting and analysis.

Piloting and then moving quickly to full launch of supplier portals and collaboration platforms, complete with quality management dashboards and workflows. Among the manufacturers visited, those in high tech are the most advanced in this area, often implementing Vendor Managed Inventory (VMI) and demand management applications that deliver real-time order status and forecasts.

Designing in services is now becoming commonplace, making cloud integration expertise critical for manufacturers. From simplistic services integration on iPhones to the full implementation of voice-activated controls including emergency assistance in the latest luxury cars, adding in services integrated to the cloud is redefining the competitive landscape of industries today. Revising a product or launching an new product generation with embedded services can mitigate price wars, which is why many manufacturers are pursing this strategy today.

Accelerating new product development and introduction (NPDI) strategies to attain time-to-market objectives. Using cloud-based platforms in high tech manufacturing is growing today as time-to-market constraints are requiring greater collaboration earlier in design cycles.

Managing indirect and direct channel sales from a single cloud platform tracking sales results against quota at the individual, group and divisional level is now commonplace across all manufacturers visited. Dashboards report back the status by each rep and for sales managers, the profitability of each deal.

Using cloud-based marketing automation applications to plan, execute and most important, track results of every campaign. Marketing is under a microscope in many manufacturers today, as marketing automation applications have promised to deliver exceptional results and many manufacturers are still struggling to align their internal content, strategies and ability to execute with the potential these systems promise.

Automating customer service, support and common order status inquiries online, integrating these systems to distributed order management, pricing, and content management platforms. Manufacturing industries are at varying levels of adoption when it comes to automating self-service. The cost and time advantages in high tech are the highest levels of adoption I’ve seen in visiting manufacturers however.

Increasing reliance on two-tier ERP strategies to gain greater efficiencies in material planning, supplier management and reduce logistics costs. Manufacturers are also using this strategy to gain greater independence from a single ERP vendor dominating their entire operations. Several manufacturers remarked that their large, monolithic ERP systems could not, without intensive programming and customization, scale down to the smaller operational needs in distributed geographic regions. Cloud-based ERP systems are getting the attention of manufacturers pursuing two-tier ERP strategies. Acumatica, Cincom, Microsoft, NetSuite and Plex Systems are leaders in this area of ERP systems.

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Last year, four out of every ten CRM systems sold were SaaS-based, and the trend is accelerating.

In the recent Gartner report Market Share Analysis: Customer Relationship Management Software, Worldwide, 2012 published April 18, 2013 the authors provide insights into why the worldwide CRM market experienced 12% growth in 2012, three times the average of all enterprise software categories. Gartner cites demand they are seeing from their enterprise clients for CRM systems that can help acquire customers, analyze and act on customer behaviors, and increase all-channel management performance. Big data inquiries are also increasing in CRM, driven by the interest enterprise clients have in getting more value from social network data and interactions.

Key take-aways from the report include the following:

The CRM worldwide market grew from $16B to $18B attaining a 12.5% growth rate from 2011 to 2012.

80% of all CRM software in 2012 was sold in North America and Western Europe. North America CRM sales grew 16.6% from 2011 to 2012. The highest growth regions of CRM sales between 2011 to 2012 included Greater China (26.9%) and Latin America (24.3%).

Salesforce.com is the world’s leading CRM software vendor with 14% market share in 2012 ($2.5B in sales), surpassing SAP (12.9%, $2.3B in sales), Oracle (11.1%, 2.01B in sales), Microsoft (6.3%, $1.1B in sales), IBM (3.6%, $649M in sales) and all others. The top ten vendors worldwide generated $10.9B in sales alone in 2012.

Worldwide CRM software spending by subsegment shows Customer Service and Support leading all categories with 36.8% of all spending in 2012 ($6.6B), followed by CRM Sales (26.3%, $4.7B), Marketing (includes marketing automation) (20%, $3.6B) and e-commerce (16.9%, $3B). The following chart shows the distribution of revenue by category:

40% of all CRM software sold in 2012 worldwide was SaaS-based. Gartner states that they are seeing their enterprise clients seek out easier-to-deploy CRM systems compared to on-premise alternatives. The report states that many enterprises are now replacing their legacy systems with SaaS-based CRM systems as well. Enterprise clients also report that SaaS-based CRM systems are delivering net-new applications that deliver complementary functionality not possible with legacy and previous-generation CRM platforms.

Communications, media and IT services were the biggest spenders on CRM in 2012 due to their call center requirements. Manufacturing including Consumer Packaged Goods (CPG) was second, and banking & securities were third.